The 10 Most Common Wage-And-Hour Issues – Part 2

By Kristy Albrecht and Beth AlvinePhotos courtesy of Fredrikson & Byron Law Firm

A couple months ago, we started a discussion about the top 10 wage-and-hour mistakes we see in our practice. We covered the first five mistakes we often encounter when working with our clients, including classifying independent contractors, distinguishing between exempt and non-exempt positions, and compensating employees for training, among others.

More often than not, the scenario we face is that an employer tries to pay its employees fairly but makes a minor technical mistake — or a wrong assumption — and that mistake ends up costing the business thousands of dollars or more.

In 2017, the U.S. Department of Labor found more than $270 million in back wages for more than 240,000 employees. That is $740,000 in back wages collected per day from employers, and that, of course, does not include the substantial amounts paid by employers in wage-and-hour litigation matters. While these numbers are troubling, the good news is that most wage-and-hour mistakes are avoidable on the front end when you know the applicable standards.

One of the most challenging wage-and-hour issues employers face is, essentially: What is work? Of course, an employee must be paid for the time they work, but what counts as “work” time? Do employees need to be paid for on-call time? During rest breaks? What about meal periods? If an employee travels for work, is that work time? What about drive time? Here, we take a closer look at these questions and more.

6. Failing to Properly Pay Rest Breaks and Meal Periods

Federal law does not require meal or rest breaks. However, bona fide meal breaks, where an employee is not interrupted and is completely relieved from duty, may be unpaid. Generally, these meal breaks are at least 30 minutes.

Under North Dakota law, any employee who works a shift exceeding five hours must have an unpaid 30-minute, uninterrupted meal break. If an employer provides other breaks to employees such as coffee breaks, those breaks must be paid if they are less than 30 minutes.

We once received a call from an employer who asked about whether its employees could waive their lunch breaks. In other words, can employers allow their employees to work through their meal breaks? The answer is yes; it is possible to waive a meal break. However, we recommend having good documentation of the waiver.

7. Failing to Pay for Travel Time

In today’s workplace, travel for work is common and often expected. Unfortunately, travel time is also one of the most complex wage-and-hour issues for employers.

In a typical workday, most employees leave their home in the morning, go to work and drive home after work. That usual commute time is not paid work time. However, if an employee goes to work and then travels during the workday for business, that time spent traveling during the workday is paid work time.

Additionally, if an employee travels somewhere for work that requires an overnight stay, employers generally need to pay the travel time if the travel occurs during the employee’s regular work hours. This applies regardless of what day of the week the employee travels. Other rules may also obligate employers to pay for travel time, depending on various circumstances.

For example, what if the employer provides a company vehicle? Does that make the commute time compensable? As is frequently the case, the answer is: it depends. We recently had a client receive a challenge on a commute-time issue, where the company provided company vehicles to its employees. We successfully defended that case, largely because the company did not require employees to drive company vehicles to the worksite, and the employees were not transporting equipment for the company in the vehicles. In other words, employee use of company vehicles was simply a perk, and that perk did not convert commute time into work time.

8. Not Appropriately Tracking (All) Hours Worked

In an increasingly mobile world, effectively tracking all hours worked for employees has become a challenge. We have seen employers simply pay based on the shift schedule or have their employees merely state on their timesheets their total hours for each workday. In other cases, the employees wrote the same amount of time every day, basically echoing the shift schedule. The risk in these practices is that the employer’s records may not accurately reflect actual hours worked. In that situation, the employer is vulnerable to an “off the clock” lawsuit for unpaid wages.

We recommend requiring employees to record the start and end times of all shifts and meal breaks. Further, employers should train their employees to record all their time and should also require (them) to certify the accuracy of their timesheets. Remember, the wage-and-hour laws require that employers compensate employees for all hours actually worked, regardless of whether the time was authorized.

9. Failing to Pay for Time Spent On Call

Most employers know they have to pay their employees for the work they perform. But what about when employees are on call? Do employees need to be compensated if they are on standby or waiting to work?

The answer, again, is that it depends. This issue is governed by a multi-factor test, and specific answers may depend on granular details. Some questions we ask are:

Is the employee required to be on the job premises?

What are the geographic restrictions on the employee’s movements?

How often is the employee actually called in?

Can an on-call employee easily trade responsibilities with a coworker?

Is the employee allowed to use his or her time freely while on call?

Ultimately, the answer depends on whether a court or an agency would find that the employee is “engaged to wait” or “waiting to be engaged.”

For example, we had an employer who had certain employees carry a cell phone to respond to any emergencies on the business premises over the weekend. Employees could answer calls within 30 minutes and had the ability to trade responsibilities with other coworkers. Additionally, the employees were not geographically restricted to the Fargo-Moorhead area and could travel up to 90 minutes away. In that case, we concluded the on-call time was likely not compensable. Though, of course, once the employee is called and is handling a situation, the employee is working and needs to be compensated accordingly.

As you can see, whether on-call time needs to be paid is quite fact-specific. As a general rule of thumb, though, the more restricted the employee is while on-call, the more likely the on-call time is compensable work time.

10. Misclassifying Employees as Interns

Unpaid internships have been a hot topic for investigation by the U.S. Department of Labor. True interns are not employees under the Fair Labor Standards Act and may be unpaid.

In early 2018, the Department of Labor set a new seven-factor test for whether an individual is truly an “intern.” The test essentially turns on whether the “primary beneficiary” of the internship is the company or the student. If, as a whole, the company is the primary beneficiary of the relationship, then the internship must be paid, and the intern is entitled to minimum wage and overtime protections.

As always, working with your legal counsel and getting the details correct on the front end can prevent many of these common mistakes. If you have any wage-and-hour questions, we would welcome the chance to work with you through these tough issues. Please feel free to reach out to us for more information.

About the Attorneys

Kristy Albrecht is a shareholder and member of the employment and labor, litigation, transportation and appellate groups with Fredrikson & Byron Law Firm in Fargo. She advises employers on a variety of employment law issues, including hiring, firing, discipline, employee leave and accommodation laws, employee handbooks, drug and alcohol policies, and separation agreements.

Beth Alvine is an associate with Fredrikson & Byron and a member of the employment and labor and business-advisory-services groups. She advises and represents employers on employment and labor issues, including terminations, wage-and-hour compliance, drug-and-alcohol testing and policies, employee leave and accommodation strategies, and employer programs and policies.

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Fredrikson & Byron’s 277 attorneys serve clients in more than 30 practice and industry areas in seven offices in the US, China and Mexico. Fredrikson has built a reputation as the firm “where law and business meet” by bringing business acumen and entrepreneurial thinking to its work with clients, and by operating as business advisors and strategic partners as well as legal counselors.